Nuts & Bolts - Five-Minute Interview: DM by Any Other Name ...
While no one person can be omniscient about where direct marketing is heading, it's a good idea to check in from time to time with one of the practice's brightest minds: Professor Peter Fader of The Wharton School at the University of Pennsylvania.
Honored in 2007 with the Robert B. Clarke Outstanding Educator Award by the Direct Marketing Educational Foundation (DMEF), Fader also co-directs the Wharton Interactive Media Initiative. WIMI is a "data-driven research effort on interactive and digital media." And, perhaps most importantly, he has his own Wikipedia page.
Here's his take on the state of direct marketing:
Target Marketing: In your capacity as WIMI faculty co-director, what direct marketing trends are you noticing?
Peter Fader: Well, one of the things I'm noticing makes me really sad, which is: A lot of firms in the e-commerce space and the emerging interactive media space know nothing of the rich tradition of direct marketing. It frightens me when I talk to firms that are such quintessential direct marketers, but have never heard of templates such as RFM and just other classic rubrics that made direct marketing the wonderful science that it is. Individuals and firms that think, 'Oh, it's a whole new world. The old rules don't apply. We have nothing to learn from established firms.' So as much as I'm seeing occasionally good trends from companies trying out new technologies and interesting experiments, and so on, I find, in many cases that the bad that I just described outweighs the good, and it's very unfortunate.
TM: So you're talking about some of the bigger firms?
PF: No; big and small. I think there's a lot of little boutique startups who just haven't done their homework. They just don't understand that a lot of the questions they're asking were answered 40 years ago by classic direct marketing firms. They look at what they're doing, some kind of specialized online something or other and think that it has no connection whatsoever to what some of the great old firms like Franklin Mint was doing back in the 1970s. So I'm not seeing big differences for big firms, little firms; product-oriented, service-oriented. I think, in general, there's just limited respect being paid to some of the well-established principles of direct marketing. And there's too many people who are just basically making things up and selling snake oil, even though they could be doing things a lot better, even using simple methods.
TM: Do you mean like the marketers who are saying, 'It's digital. Not direct' ?
PF: Yes, but beyond that. I agree completely with that. People who not only disassociate themselves from direct, but ... a different species of people who just aren't even aware of direct. Who just think about it as nothing more than late-night infomercials, but have no idea about the wonderful science that was developed around it. So it's one thing for a firm to disassociate themselves saying, 'We're different.' It's another thing to be just completely ignorant about some of the principles that the rest of us understand really well.
TM: Testing? What's testing?
PF: That's a good example—where you'll have a lot of firms out there who aspire to be the next Google. And they are doing testing of some sort. But they're not doing it nearly as smart or efficiently, as thoughtfully as it was done years ago. And occasionally, they are doing it well. They'll bring in some kind of rocket science mathematician who knows a bit about experimental design, but still doesn't know about some of the industry practices that were commonplace in the 70s. And even if you alert them to it, say, 'You know, people were doing this a long time ago. You should learn from them.' They'll say, 'Oh, well. That was different. They were selling Star Wars chess sets back then. Today we're selling the Avatar chess set. You can't compare the two.' And it's so ridiculous how uninterested they are in learning from the past.
TM: In light of these trends, how should direct marketers be modifying their interactive media strategies?
PF: OK, so I just gave you one sad story. Now let's flip it around. There's too many people in the direct space who are clinging to the past, who are being a little too orthodox about the methods that they use, the data that they collect, the metrics that they rely upon. And are not willing to embrace or are sometimes a little afraid to embrace the greater flood of data that's coming down the pipe now. As to my first comment, it's fair to say that everybody is a direct marketer these days, you should learn from it. But at the same time, everybody's a multiplatform marketer these days, so it's not enough to rely on direct alone. It used to be that you were either a direct marketer or you were a brand-building marketer, where you don't necessarily have a one-to-one relationship with each customer, but you're going to build this big brand and hope that that's an umbrella to bring a lot of anonymous people to your business. And one of the things that we've learned in the last 10 years is that you have to be both. That direct absolutely can be used to build a brand and vice versa. But there's a lot of folks, again, old-school direct marketers who feel threatened by opening up their skill set and opening up their vocabulary. So the very fact that we still cling to the word 'direct,' it's interesting that there's such a different feeling. I'm just thinking of my students. When I talk to them about direct marketing, they go 'Eww.' But if I talk to them about interactive marketing, they go, 'Ohh.' It's the same thing. And so we need to break down the walls. We need to get people speaking the same vocabulary, regardless of where they're coming from. And so these cultural differences from the new kids on the block who don't understand direct and the old-school people who are afraid of what's becoming known as interactive, we've got to get everyone at the table and saying, 'Let's learn from the past, but adapt it to the future.'
TM: What do you see changing for direct marketers in the near future?
PF: So one big step along the way, as I said, is really embracing multiplatform. So it's not enough; we no longer have a single relationship with the customer. There's just so many different touchpoints that, on one hand, do fit well with traditional direct marketing practices. We can track the individuals and anticipate where they're going over time and decide which ones to go after and which ones to cast aside. But there's just so many new tactics out there. Many of which involve the empowered consumer, the empowered customer, that direct marketers still aren't—in fact, a lot of marketers—still aren't quite comfortable with. You know what happens when the customer is really driving the relationship instead of the firm. It used to be up to the firm to decide when and how to contact each customer and so on. But when you flip it all around, thanks to Web 2.0 and all of that, it just makes it a lot tougher. And so we need to change our practices to allow, not only all of the old monitoring and measuring and projecting that we did before, but to do it on the customer's terms. Whatever platform they want to use, whatever mode of communication and transactions that make them most comfortable; we need to change our business to meet their needs.
TM: How do you envision direct marketing evolving during the next decade?
PF: It depends whether I have my optimistic hat on or not. The rosy picture is that we have this enlightenment that I've been referring to. The idea that we have to drop the word direct, keep the practices, keep the really great analytical approaches that we have, but make it more broadly applicable. And to get everybody, all firms, to acknowledge that basically what they're doing is what we used to call direct marketing. We don't call it that anymore because it's kind of a, I hate to say it, but kind of an old-fashioned and somewhat pejorative word. So the good picture would be that we learn from the past, but adapt it to the future and blend in some new statistical methods with the old, well-established ones. Come up with an entirely new vocabulary. And there's just so many firms out there that they're doing direct marketing, as far as I'm concerned. But they disassociate themselves from that. And it would be great to get these firms to stand tall and be willing to call themselves, again whether it's direct marketers or some word that we can all agree on and have more shared practices, instead of a lot of this us vs. them games that seem to be going on today.